Lotsa Bucks Leased Equipment to Shannon Company on January 1

question 202

Essay

Lotsa Bucks leased equipment to Shannon Company on January 1, 2018. The lease payments were calculated to provide the lessor a 10% return. Ten annual lease payments of $20,000 are due at the beginning of each year beginning January 1, 2018. The present value of an annuity due of $1 at 10% for ten periods is 6.75902.
Required:
1. Prepare the journal entries to record the lease by Shannon at January 1, 2018, and at December 31, 2018, the end of the reporting period. Consider this to be a finance lease. Round your answers to the nearest whole dollar amounts.
2. Prepare the journal entries to record the lease by Shannon at January 1, 2018, and at December 31, 2018, the end of the reporting period. Consider this to be an operating lease. Round your answers to the nearest whole dollar amounts.

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Definitions:

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